Some Companies Benefit From Bio-Terrorism

Oct. 11 -- With the increasing threat of bio-terrorism looming in many people's minds, a handful of companies that can help treat and detect bio-terrorist outbreaks have been thrust into the spotlight.

Even though some of these companies are still in the red and others have products that have yet to hit the market, that has mattered little to stock investors. Many of these companies' stock prices have shot up astronomically in recent days, propelled by the idea that their products could be in widespread use should the specter of bio-terrorism attacks continue to loom over the nation.

Cepheid, a Sunnyvale, Calif.-based maker of a system that analyzes genetic material in record time, has seen its stock shoot up dramatically in the weeks following the Sept. 11 attacks. Shares of U.K.-based biotechnology company Acambis, which is developing a vaccine for smallpox and the West Nile virus, is another company to benefit. Others include companies that make biological detection systems like Bruker Daltronics and Nanogen and biotechnology company Avant Immunotherapeutics, to name a few.

Spurring the interest in these companies is increasing interest from the U.S. government in shoring up its defenses against potential attacks of bio-terrorism.

The threat of bio-terrorism "has been a topic that's been of great interest to people and has generated a lot of publicity," notes Cepheid's Chief Financial Officer Cathy Smith.

Smith says Cepheid's agreement, announced in August, to develop biological agent detection systems with Baltimore-based engineering firm Environmental Technologies Group was "the right deal at the right time." Investors have agreed. The company's stock has shot up from $1.53 at the close of Sept. 10 to $8.19 at Tuesday's close — a rise of 435 percent.

Profits Elusive

The catch? Cepheid is not profitable, and some analysts don't expect it to show a profit until 2004. Further, the incredible run-up in the company's stock has prompted some analysts to advise investors to take a breather.